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Here’s an email I recently received from a reader who’s about my age and is wondering what her retirement is going to look like. Or rather, if she’s even going to have one.

Over the past couple of years, I’ve been working to get my financial life in order – but I’m worried it’s too late. I rent an apartment with my 13-year-old son, have no debts, have $4,000 in my emergency fund, and a work 401K with $35,000 in it. It doesn’t sound so bad, except that I’m 57 years old. According to my calculations, I’ll have to work until I’m 70 years old and live to 84. Do you have any suggestions or comments?
– Susan

The first comment I’ll make, Susan, is that you’re in a crowded boat. I’m more or less in the same one, and I’ll bet there are plenty of people reading this that are too.

How did we get here?

When my father passed away a few years ago, he had been retired for close to 30 years. Despite the fact that he never made more than $50,000 in a single year, he was never short of cash in retirement. Between military and civilian benefits, he was bringing in nearly as much retired as he made working: $45,000 a year. And because he lived a very modest life in a place with a low cost of living (suburban Atlanta), he saved more of his retirement income than he spent.

His son, on the other hand – yours truly – faces a much different future. Having been self-employed for more than 30 years, the only pension I’ll be getting is (hopefully) from Social Security and the only other income I’ll have is what I can generate from my investments and retirement accounts. Unlike my dad, nobody but me is contributing to my retirement. I don’t have a company pension or anyone matching my retirement plan contributions.

I also have another problem: I don’t live in a low-cost area. The property taxes alone on my modest Fort Lauderdale home are 10 times what my father paid – enough to consume about half of my expected income from Social Security.

Of course, I made this bed myself. I chose where I live and what I do for a living. But millions more find themselves in this situation because of something they couldn’t control. Namely, the replacement of traditional company pensions (called defined benefit plans) with the retirement plan more prevalent today (called defined contribution).

Defined benefit pension plans are like Social Security. They guarantee a monthly check (benefit) for life. You can’t outlive the money, and the risk of having enough set aside is the company’s – not the employee’s. In my father’s day, these were common and funded by the employer. Defined contribution plans, on the other hand, shift the burden to the employee. These plans – think 401(k) – have no guarantees and are largely funded by you.

Result? You contribute as much as you can afford, then hope like hell the market doesn’t melt down on the eve of your retirement and that your balance is enough to keep you comfortable for the rest of your life. If it isn’t, that’s your problem, not the company’s.

According to this 2011 study from consulting firm Towers Watson, in 2002, 83 percent of Fortune 100 companies provided defined benefit pension plans. Today that number has dropped to 30 percent. That increases the likelihood that with each passing day, more people will be sharing this scary boat.

What can we do?

While I do have more saved than Susan, depending on what happens, it still might not be enough. For example, if interest rates stay this low, generating an adequate income (at least safely) from my retirement savings will be tough. That leaves me with one or a combination of the following choices…

Radically reduce my cost of living when I retire, perhaps by moving to a lower-cost home here in Fort Lauderdale or somewhere else.

Accumulate as much as possible now, then pray for considerably higher interest rates on low-risk accounts by the time I retire.

Keep working past traditional retirement age.

Supplement my retirement income by spending my principal, then hope I’m dead before it is.

Take a measured amount of risk with my retirement savings to create more.

These are my choices, and Susan’s as well. And what she and I will do is probably a combination of all of them.

All of us – Susan, you, and me – need to put as much money aside as we possibly can. How?

Spend less, save more, and invest wisely. For example, one way to spend less and save more is to create a savings goal, then find the money to reach it by creating a spending plan, also known as a budget. That’s why you’ll find stories here like Budgeting Your Way to Happiness.

Pay less interest. Since paying interest on debt steals money we could be saving, we need to get rid of it. That’s why we have stories like 4 Steps to Destroy Debt.

Save smart. When it comes to making our savings work as hard for us as we do for them, we need to learn to take an acceptable level of risk. That’s why this website has an Investing section, with stories like How Do I Get Started Investing? We also need to get the highest interest possible on our savings, which is why we have a rates search page.

Since Susan is concerned about her financial situation, maybe she’s already aware of many of these stories and tips. In fact, that’s probably why she’s a regular reader in the first place. She’s also recognized what may be the only true solution: “work until I’m 70 years old.”

While that may sound depressing, it doesn’t have to be. Because in an ideal world, none of us should be “working” at all.

Unlike my dad, I love what I do, which means I don’t “work,” at least in the traditional sense. If I win the lottery today, I’ll still be sitting here tomorrow. Granted, I certainly want to work less as I age, as well as having the ability to not work at all if I choose. But what we all should be seeking is a career that keeps us coming back for more, especially if you see retirement on the horizon. Because if you use every trick in the personal finance book and still won’t have enough to retire, doing something meaningful and rewarding is the only way your golden years will be golden, both physically and emotionally.

I wish I could provide a magic bullet – a simple solution that would guarantee that those approaching retirement without sufficient savings could lead the life they’ve worked for and deserve. But doing something you love is about the only solution. So if you haven’t found the right job, Susan, start looking. That’s why we have a whole section of this site called Jobs and Work.

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